The former Rangers manager will be joined by the businessman, Ian Hart, who has agreed to a similar offer. Both men will take up their positions with immediate effect.
Smith has been considering the offer for several weeks, and was adamant that he will not play any role in the football operation, since he does not want to overshadow his friend and protege, manager Ally McCoist.
The board appointments are also significant since they represent a show of support and commitment to the current owners ahead of the launch of a share issue. Roadshows with potential institutional investors will begin this week, before fans are invited to buy stakes in the club.
"Serious constructive efforts are being made to rebuild Rangers after a very difficult period in the club's history and if I can play a part helping that process, I am willing to do so," Smith said. "Apart from being a former manager, I am first and foremost a supporter, and am no different from the many thousands of other Rangers fans who have shown they're willing to do what they can to ensure Rangers rise again.
"I must make it clear, however, that I will not be playing any role in the day-to-day running of the club or the team. It's the manager's job to run the team and the chief executive's job to run the club's affairs. The role I will fulfil is to bring my experience of Rangers and football in general to the board table. The people who purchased the club have shown over the last few months they are serious in their intentions to rebuild Rangers and I am happy, as many other fans have done, to lend my support."
Hart is a close friend of Douglas Park, the businessman who was a prominent member of the Blue Knights group whose bid to buy the club was scuppered last May by Charles Green's consortium. Hart was initially named as one of Green's investors after money he previously donated to the club's youth department was transformed into shares, and he has been assisting the new owners in recent months.
"The board felt there was a need to bring in people with background and experience in the west of Scotland," said Hart, who is now retired. "I have been a supporter of the club and youth development programme, in particular, for a very long time and this is an area that will become increasingly important to all clubs in years to come."
The Rangers board now comprises the chairman, Malcolm Murray, the chief executive, Green, the finance director, Brian Stockbridge, plus Smith and Hart.
"It is extremely important to have a board that has the respect of investors and Rangers supporters," said Green. "The consortium I led to buy the club are not Rangers people but there could be none better than Walter and Ian to fill that void."
The return of Smith, who guided Rangers to the club's nine-in-a-row success, then won a further three titles in his second spell in charge from 2007 to 2011, will be reassuring to supporters ahead of the share issue, with fans able to buy into the initial public offering at a minimum of £500, or through the Rangers Supporters Trust Buy Rangers scheme, which was launched last week.
"The board and management are delighted that Walter and Ian are joining," said Murray. "They bring integrity, wisdom, experience and excellent contacts, and will ensure the highest standards of ethics and governance are maintained."